By Swati Pandey
SYDNEY (Reuters) – Australian retail sales surged past all expectations in November led by pre-Christmas shopping though early indicators point to weak spending in December, suggesting the economy remained in the doldrums in the final quarter of 2019.
Data out Friday showed retail sales jumped 0.9% in November – the biggest rise since February 2019 – to A$27.91 billion ($19.13 billion) boosted by ‘Black Friday’ sales. Economists polled by Reuters had forecast a 0.4% gain.
Clothing, home wares, department stores, restaurants and eating out all saw gains in the month.
“The trend in sales has deteriorated, such that faster growth in November partly reflects the increased popularity of Black Friday/Cyber Monday sales,” NAB economists wrote in a note.
“If sales exceed our forecast that could reflect a bring forward of Xmas spending, where December sales have become less important over time.”
Australia’s A$1.95 trillion ($1.3 trillion) economy has hit a soft patch after more than 28 years without a recession as consumers struggling with stagnant wages and sky-high debt sharply cut back on spending
Weak private consumption has come despite the Reserve Bank of Australia’s (RBA) three interest rate cuts to 0.75% last year. Government giveaways also provided little impetus with billions in tax rebates being saved rather than spent.
The economic doldrum is becoming an increasing headache for Prime Minster Scott Morrison given he won re-election in May on a pledge the economy would always be stronger under his guidance.
The worst bushfire season on record, that has scorched more than 10 million hectares of land and destroyed thousands of home in recent months, is also likely to weigh on consumption, at least in the near-term.
Some economists are predicting the bushfire crisis could put a brake on Australia’s economic growth this quarter, that could force an interest rate cut as soon as February.
Investors are wagering policy makers will have to do more to revive spending and futures are pricing in a 40% chance of a rate cut by February <0#YIB:>.
In signs of the early impact from the catastrophic fires, a gauge of Australian consumer confidence slumped last week to its lowest level in more than four years. Job advertisements suffered their largest monthly drop in seven months in December.
(Reporting by Swati Pandey; Editing by Michael Perry)